At first, expected coefficients for fiscal policy are mentioned in the Tab 1. Positive relation is expected for the lagged value of the government debt. With increasing total debt, the government should react by reducing deficit to the total government debt will decrease in the following periods. For the positive output gap, when the economy is above potential product, the government should implement a restrictive fiscal policy. For the lagged balance of primary budget as a percentage of GDP, a negative relation is expected, which indicates that the instrument of fiscal policy does not have a complete effect but only partial, and further adaptation occurs in the following period. Expansion- ary fiscal policy should implement in a situation of increasing rate of unemployment.6 The latest variable in the equation of fiscal policy has two scenarios. A positive relation implies coordination of both policies – both in the same direction – carrying out either expansion or restriction. They perform contradictory in the case of the negative relation. One of these policies makes expansion, and the other one restriction.
At first, expected coefficients for fiscal policy are mentioned in the Tab 1. Positive relation is expected for the lagged value of the government debt. With increasing total debt, the government should react by reducing deficit to the total government debt will decrease in the following periods. For the positive output gap, when the economy is above potential product, the government should implement a restrictive fiscal policy. For the lagged balance of primary budget as a percentage of GDP, a negative relation is expected, which indicates that the instrument of fiscal policy does not have a complete effect but only partial, and further adaptation occurs in the following period. Expansion- ary fiscal policy should implement in a situation of increasing rate of unemployment.6 The latest variable in the equation of fiscal policy has two scenarios. A positive relation implies coordination of both policies – both in the same direction – carrying out either expansion or restriction. They perform contradictory in the case of the negative relation. One of these policies makes expansion, and the other one restriction.
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